Wage requirement could kill central Illinois company

Friday

May 18, 2007 at 12:01 AMMay 18, 2007 at 5:23 PM

SPRINGFIELD -- A Carlinville company lost two large state contracts in the past year because Illinois law requires it to pay a higher minimum wage than successful bidders from other states, according to an administrator for the firm.

Dana Heupel

By DANA HEUPEL

STATE CAPITOL BUREAU

SPRINGFIELD -- A Carlinville company lost two large state contracts in the past year because Illinois law requires it to pay a higher minimum wage than successful bidders from other states, according to an administrator for the firm.

Rely Services, also known as Accudata Computer Services, could be forced to lay off most of its 134 full- and part-time employees — or even move to Indiana — if it loses another state of Illinois contract it is bidding to keep, said operations manager Brenda Witt.

“I know that the state needs to keep their costs down, but they also need to keep these jobs in state,” Witt said. She hopes lawmakers can provide a solution.

“They need to get legislation in place to level the playing field. That’s all I’m asking,” Witt said.

Accudata has held state contracts for data-entry services since it was formed in Carlinville in 1989, Witt said. Rely Services of Hoffman Estates purchased the company in 2005.

Employees type information from paper forms into computers, along with performing other duties such as image scanning. The 70 part-time workers are mostly high school and college students, and many of the company’s 64 full-time employees are working mothers who schedule their hours around family responsibilities, she said.

Rely Services’ data-input workers are paid by the number of keystrokes, but they must earn at least minimum wage, which in Illinois is now $6.50 an hour, Witt said.

Until last year, the company had a contract with the state Department of Revenue to input sales tax information from businesses. But in seeking to become one of three companies to get a new three-year contract for the work, Rely Services’ bid was the fourth lowest by $15,351, she said. The $798,000 job went to companies from North Carolina, Michigan and Indiana, where the minimum wage in all three states at the time was $5.15.

North Carolina’s minimum wage has since risen to $6.15 and will go up to $7.15 on July 1. Michigan’s is now $6.95 and will increase to $7.15 on July 1. Indiana’s minimum wage is still at $5.15 — the same as the federal level. Illinois’ will increase to $7.50 on July 1.

Rely Services was forced to lay off 15 workers and eliminate its night shift when it lost that contract, Witt said. The company also lost another $905,000 data-entry contract with the secretary of state’s office to the Michigan firm. Rely Services is protesting that award.

Witt wants the state to enact legislation to give preference to Illinois bidders, similar to a system used in Indiana. In 2005, Gov. Mitch Daniels issued an executive order that, among other things, discounts Indiana companies’ bids on state contracts by up to 5 percent when compared with out-of-state proposals.

Illinois does give preferences on some contracts to minority or women bidders or small businesses, said Susan Hofer, spokeswoman for the Illinois Department of Central Management Services, but not to companies simply because they are in the state.

“What we try and do is balance that with getting the best service at the best price,” she said. “Certainly, if there are other ways that meet that balance, we would be interested in looking at them.”

Witt has talked to her legislators, Sen. Deanna Demuzio, D-Carlinville, and Rep. Gary Hannig, D-Litchfield. A Senate resolution sponsored by Demuzio and Sen. Michael Frerichs, D-Gifford, would create a task force to examine the state procurement code, “particularly on the preference given to Illinois businesses.” That legislation, SR52, passed the Senate on a unanimous vote.

“Not only myself but other legislators are having the same experience where bidding has gone out of state,” Demuzio said, adding that large-scale layoffs would certainly adversely affect her hometown.

Rely Services is bidding to retain another Department of Revenue contract to input data from IL-1040 individual income tax returns. State government will give preferences to small businesses on that award, and bids are due by June 8.

Losing that contract could mean that only about 10 jobs would remain at Rely Services’ Carlinville operation, Witt said. The company still has contracts with the Illinois Department of Natural Resources, the state police and the state fire marshal’s office.

If those layoffs occur, Witt said, “it’s going to make a big impact on this area — a huge impact.”

Rely Services owner Neil Khot has even considered moving the business to Indiana, Witt said, where the company could get an in-state preference on contracts there and still bid on Illinois work.